Lack of minimum wage fixing increases industrial conflict and discourages the development of stable collective bargaining relationships. Levels of wages that are inadequate to maintain family life, long hours of work, women's night work, industrial home work, sweatshop methods and child labour have been common in the early stages of industrial expansion in nearly all countries. As countries grow wealthier, the income of adult workers tends to increase, and it ceases to be a matter of economic necessity for wives to work in factory night shifts or for children to be sent out to earn supplementary wages. In many of the less developed countries, however, poverty is still a compelling force inducing these and other socially undesirable forms of industrial labour, notwithstanding laws and regulations to the contrary. These abuses are difficult to correct, especially where factories are small in size and large in number, public administration weak and the cost of adequate policing and inspection disproportionately high.
The 1992 minimum wage rates set by UK wages councils ranged from £2.50 to £3.10 per hour, but were reported to be as low as £1.50 an hour for security guards and contract cleaners in central London. By 1993, an estimated 2 million women were earning minimum rates set by wages councils in the UK. The same year Parliament considered passing legislation on the abolition of the wages council system, which would threaten protection of those already earning a sparse minimum wage. The 1986 Wages Act previously cancelled minimum wage protection for workers under 21 and any standards for holiday pay or overtime compensation. Such measures have rendered UK wages meagre by western European standards.
Copious evidence exists that minimum wage laws reduce the job prospects of the least skilled, tend to create high tensions over wage differentials, and often lead to a wage explosion. A minimum wage policy has no place in a programme that is serious about employment, competitiveness and credibility.